17
Mar
If you utilize a will to facilitate asset transfers after you are gone, you would name an executor in the document to serve as the administrator. They would take care of the tasks that must be completed to bring your wishes to fruition, but they would not be able to act independently.
The will would be admitted to probate, and the court would supervise while the estate is being administered. This court will also preside when someone passes away with no estate planning documents at all, which is referred to as the condition of intestacy.
What Happens During Probate?
When a will is admitted to probate, there is a proving of the will. The court will examine the document to determine if it is valid. If anyone wants to challenge the validity of the will, they can come forward during probate.
The executor will obtain an employer identification number for tax purposes, and they will start a bank account on behalf of the estate. Creditors will be notified about the passing of the decedent, and they are given time to come forward.
Final debts will be paid, including taxes. Meanwhile, the executor will inventory the assets and prepare them for distribution to the heirs. This preparation process can include appraisals and liquidation.
After all of these matters have been resolved, the court will close the estate, and the beneficiaries will receive their inheritances.
Probate Drawbacks
Probate serves a purpose, but if you are waiting for an inheritance, you may not welcome the process. Depending on the jurisdiction and the nature of the estate, it will typically take between six months to a year. The heirs to an estate do not receive anything while the estate is in probate.
There are expenses, including court costs, the executor’s payment, potential legal and accounting fees, appraisal and liquidation charges, and incidentals. The probate expenditures reduce the value of the estate, this is going to eventually impact the heirs.
Can Probate Be Avoided?
It is possible to implement a proactive probate avoidance strategy when you are planning your estate. A revocable living trust is a very effective and versatile device that can be the ideal choice for a wide range of people.
If you establish a living trust, you would be the trustee, so you would not lose control of the assets. You would also retain the right revocation, so you could rescind the trust and reassume direct personal possession of the property at any time.
When you are creating the trust declaration, you name a trustee to act as the administrator after your passing, and your heirs would be the beneficiaries. After your death, the trustee would distribute the assets to the beneficiaries. The probate court would not be involved.
Spendthrift Protections
Aside from the avoidance of probate, there is another major advantage. If you use a will to facilitate asset transfers, the inheritors will receive lump sums if there is no testamentary trust included in the will.
This will be concerning if you aren’t sure about the money management capabilities of someone on your inheritance list. You can account for this if you have a living trust.
A spendthrift clause can be included, and the trust would become irrevocable after your passing. The beneficiaries would not be able to reach the principal, and their creditors would “step into their shoes,” so they would not be able to attach the principal either.
You would have the ability to leave instructions in the trust declaration with regard to the asset distributions. If you want the beneficiaries to receive limited incremental distributions to prevent reckless spending, you can dictate that arrangement.
Take Action Today!
If you are going through life without an estate plan, action is required. You can schedule a consultation at our Greenville, SC estate planning office if you call us at 864-268-8244.
There is also a contact form on this site you can use to send us a message, and if you reach out electronically, you will receive a prompt response.
